Apologies for mangling Jane Austen’s famous opening line to Pride and Prejudice, but it seems appropriate. Having taxed us silly in the Autumn, looks like Reeves may be back for more in the Spring.
The UK is in an awful pickle right now and while Rachel Reeves inherited a mess from the Tories, she’s only made it worse and yes, Pride and Prejudice does come into it.
Pride, because Reeves deluded herself into thinking she knew how to run a modern economy when she didn’t.
Prejudice, because last year’s Budget was an ideologically motivated attack on business that has horribly backfired.
Labour is taking money from the public sector – via £40billion worth of tax hikes – while borrowing another £30billion.
Most of that will be poured into an unreformed public sector, where productivity hasn’t increased this millennium.
Reeves is diverting money from the productive area of the economy, into the unproductive one. Then wonders why the UK isn’t growing.
As well as pride, prejudice and tax hikes, Reeves has shown little economic sense and zero political sensibility.
Her decision to talk down the UK economy was a disaster. It killed the growth she was hoping to generate overnight.
Now we’re possibly heading into a recession.
By way of a good old-fashioned sterling crisis, if last week’s events are any guide.
UK borrowing costs have just hit the highest level this millennium. Yet Reeves chose this moment to borrow a staggering £297billion.
Heaven knows who’s going to lend us that and how much we’ll have to pay them.
Reeves may dress like a Bank of England trainee but displays all the recklessness of an entitled Regency fop gambling the family fortune at the card table.
She broke her own “unbreakable” fiscal rule to justify borrowing all that extra money, and is now finding her sums don’t add up.
The Office for Budget Responsibility will publicly report on whether she’ll meet her fiscal rules on 26 March, but it’s already started leaking its conclusions.
Sources are hinting that she’s on course to overspend by £600million, according to The Sunday Times. If gilt yields rise higher, so will that figure.
Which means we’re either looking at tax hikes or spending cuts in a hurried Spring statement, as Reeves desperately tries to calm markets and stop our borrowing costs rocketing higher.
It didn’t take me long to come up with 20 errors that Rachel Reeves has made since being appointed Chancellor.
I’m still struggling to think of something she’s got right. She has to change that, fast. I don’t think she will, and here’s why.
It requires an entire ideological reset.
Instead of battering the private sector while buttering up public sector unions, Reeves must liberate enterprise to attract capital and revive economic spirits.
She needs to grant tax breaks to encourage investment, overhaul business rates and stop predatory foreign private equity companies picking off UK companies on the cheap.
Cutting stamp duty on share transactions and property purchases would also get the economy – and people – moving again.
She should also reverse her planned national insurance raid on employers.
Reeves won’t do any of these things. It’s not in her mindset. So she’ll just tinker and pretend.
The remainder of her tenure looks set to be “a succession of busy nothings”, to quote Jane Austen again. And we’ll foot the bill. In the shape of higher taxes, lower growth and lost jobs. It’s going to be a humbling experience.
